Question 1 You are considering an additional product in an existing product line. What is the incremental cashflow of the new product given the following information: • Sales of the new product will be 198m but sales of the existing products will fall by 22m. • Expenses related to the new product will be 76m but the loss sales on existing products will cause existing expenses to fall by 11m • Depreciation on the new equipment will be 17m • Tax rate is 21%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 13P
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Question 1
You are considering an additional product in an existing product line. What is the incremental cashflow
of the new product given the following information:
• Sales of the new product will be 198m but sales of the existing products will fall by 22m.
• Expenses related to the new product will be 76m but the loss sales on existing products will cause
existing expenses to fall by 11m
• Depreciation on the new equipment will be 17m
• Tax rate is 21%
Transcribed Image Text:Question 1 You are considering an additional product in an existing product line. What is the incremental cashflow of the new product given the following information: • Sales of the new product will be 198m but sales of the existing products will fall by 22m. • Expenses related to the new product will be 76m but the loss sales on existing products will cause existing expenses to fall by 11m • Depreciation on the new equipment will be 17m • Tax rate is 21%
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